Is Frontier Blowing Smoke on LNP?

After posting that Frontier Communications was giving competing telcos a hard time with porting numbers, commenter Aaron Wilcox, the Utah Account Manager for Frontier, advised that Frontier would be more than happy to port numbers given the proper paperwork was filed with the Utah Public Services Commission. At least one service provider called bunk on that claim citing that under current telecommunications law, the Utah PSC doesn’t issue the Certificates of Public Convenience and Necessity that Aaron refers to if the service area in question has less than 5,000 lines. Documents I received from the PSC indicated that they suspended LNP waivers for rural telecoms, but those documents only reference wireline-to-wireless transfers, not wireline-to-wireline.

So which is it? Can customers in Tremonton port their numbers or does Frontier have those numbers permanently locked down? Is the suspension of the wavier a boon only to wireless companies? Could customers get their phone number to a UTOPIA provider by transferring to a wireless carrier and then porting the number again? It sounds like Frontier has been taking advantage of the current regulatory structure and resulting confusion to keep customers locked into their service.

28 Responses to Is Frontier Blowing Smoke on LNP?

This Wilcox fellow is being too cute by half with his comments but Frontier is in the driver’s seat with UTOPIA in Tremonton. They know that the Utah PSC is not going to allow LNP since Tremonton has less than 5,000 access lines. If they allow an exception to their <5,000 access lines rule then every small rural telco in Utah will be under assualt by the big telcos like Qwest. Frontier has to know that UTOPIA will fail in Tremonton because of this LNP issue. UTOPIA won’t make it just on data alone. Frontier has so many customers on contract for DSL and business services by the time those run out UTOPIA will run out of money and go belly up. Frontier is just playing a waiting game and will buy up the assets of UTOPIA in Tremonton. I heard that Rich Woodworth the City Manager is leaving his job soon. It’s amazing all the people that brought us UTOPIA and the unfunded liability are all retiring or stepping down. Why is that if UTOPIA was so good and we had to have them why are they all leaving?

Frontier is acting in an unethical way, possibly violating the law and you see it as Utopia’s fault? Frontiers actions exemplify the reasons for needing Utopia NOT the other way around.

I just don’t understand why it is Utopia gets a jab in the teeth every time one of the Telco’s commits an unethical and often illegal action.

What Frontier is doing is no less unethical then when Qwest sued Utopia over pole attachments to poles that Qwest didn’t own. Or sueing clearfield over how the city wants to use their RDA money.

The Telco’s continue to get away with this type of nonsense through loopholes in the laws/regulations, political apathy, and to some extent a miss guided belief that if utopia fails it will be a fitting punishment to the city’s that went for it as city’s shouldn’t compete in the utility market.

I don’t see where “luminous” gets to use the words “loophole”, “illegal” or “unethical”. The Utah PSC created this rule long before UTOPIA was a twinkle in Tremonton’s eye. It’s designed to protect small rural phone companies from competition. As the provider of last resort Frontier serves customers all over Box Elder County NOT just the densely populated city limits of Tremonton.

The Utah PSC has this rule just for bad players like UTOPIA who want to come in and pick off the easy customers in densely populated areas while neglecting the customers that are served 10 miles out of town. It costs a lot of money for small phone companies to serve those customers. Some of Frontier’s customers are miles apart.

While UTOPIA is cutting into Frontier’s customer base in Tremonton city, they still have to serve customers outside of town in many rural areas. I don’t see UTOPIA rushing to Snowville or Plymouth and setting up shop but Frontier has, and they have invested in DSL just about everywhere based on a solid business case.

I don’t see UTOPIA rushing to Snowville or Plymouth and setting up shop

UTOPIA is legally restricted from providing service to any unincorporated area unless that area forms its own special improvement district for the purposes of getting the infrastructure installed. It is also restricted from construction in any non-pledging (not to mention non-member) city unless all residents in member cities have service available OR the construction is entirely paid for by a third party (city, homebuilder, etc). Claiming that UTOPIA is giving rural residents the shaft is disingenuous at best.

It’s also worth noting that rural telcos like Frontier receive significant subsidies via the Universal Service Fund for operating what would ordinarily be unprofitable lines. (The USF has been reported to have been over-billed by a good 25% or more.) I don’t see how they need regulatory protectionism in addition to subsidies, especially since the infrastructure was paid for decades ago and they’ve been given a really sweet deal via the Telecommunications Act of 1996 to build system upgrades that never appeared. I’m not finding a lot of sympathy for incumbent telcos. This is a pretty stark contrast to The Netherlands where the incumbent telco cooperated with muni networks and ended up being more profitable than ever despite sharply increased competition.

It’s designed to protect small rural phone companies from competition.

….
You Don’t see this as a problem?

This regulation has nothing todo with protecting these telco’s from Qwest, These are markets that Qwest would never enter because they are unprofitable unless you posses nearly all the lines and are government subsidized(the natural monopoly).

Refusing to port phone numbers is plain unethical it’s as simple as that, That number is not the phone company’s number its the customers number. Saying that they will port numbers for anyone with the right paper work knowing full well that it won’t be issued due to a regulation simply adds insult to injury. This is merely using a loophole in how the regulation is setup to place undue burden on a competing entity.

And ask yourself this, If Utopia where a private corporation starting up and offering services in this market would you still be so apathetic towards the regulation being used in this way.

luminous – you ask an excellent question: “If UTOPIA were a private corporation starting up and the offering services in this market would you still be so apathetic towards the regulation being used in this way” ??

I submit to you that this wouldn’t be a question because a private company – if they were planning on being successful would have researched this issue BEFORE they spent one thin dime on construction and realized that Tremonton wasn’t the best place to put their precious dollars. It’s called a business plan.

UTOPIA obviously didn’t research this very well or were asleep at the switch because the rule is clear. If this would have been a private company and the business case was so compelling that they had to enter the market they would have lobbied the PSC to change the rule before they invested their hard earned money.

I think this LNP issue in Tremonton is shining a very bright light on how poorly UTOPIA’s business plan was thought out. No rational private business would have invested 1+ million dollars on something that had a regulatory roadblock. I don’t see the PSC changing it just for UTOPIA in one city because the other rural carriers would have such a fit that the state would step in and shut it down.

Just because the intentions of UTOPIA are noble doesn’t make them correct. I don’t really fault Frontier for sighting this regulation. That’s business and last time I checked we live by rules in this country and if you don’t like the rule you have two choices. 1. Move on to somewhere that doesn’t have the rule or 2. Have the rule changed openly and honestly but please don’t blow a bunch of money on something all to find out that you made a mistake and start whining that the rules are unfair! The darn rule was in place years before UTOPIA was but just a dream.

If I were a board member for UTOPIA, I wouldn’t invest another dollar in Tremonton till this matter is cleared up, and the service providers should take note and do this same. There’s more to the story than just a 10-digit phone number. There’s also a matter of public safety. How are the service providers going to provide addressing that uses the Box Elder County Master Street Address Guide for their customers? Without that agreement if a customer dials 911 where are they going to send the responders? Somewhere in Salt Lake City? Proper Planning Prevents Poor Performance – It works EVERYTIME it’s tried.

…Qwest would never enter because they are unprofitable unless you posses nearly all the lines and are government subsidized(the natural monopoly).

Using the logic of “luminous” why would anyone try to go into Tremonton – spend millions of dollars for just a few customers. Even if UTOPIA is able to attract half of the customers in the city limits that’s only 1,200 or so customers. And I don’t expect the Frontier folks to stand idly by and let UTOPIA come in and just take their customers without some sort of resistance. If Frontier has been doing their homework as I suspect they have since UTOPIA has been talked about for years I’m sure they have gone in and signed everyone they possibly can to a long term contract both residential and commercial. How long can UTOPIA survive waiting on contracts to expire? Their money is running out and they only have a finite amount and everyday that goes by those funds get smaller and smaller.

If UTOPIA has planned so poorly in Tremonton, how come they snapped up 20% of the market without LNP? I would say that they probably have had some contingency plan that allowed them to pull this off. Like maybe the knowledge that many of Tremonton’s residents are wireless-only because they hate Frontier so much. And those numbers are portable.

Speaking of 911, though, Frontier purposefully stonewalled UTOPIA providers as long as possible on getting them data to properly setup E911 services. That’s data they are legally obligated to provide, but they’ll sure try and make it as difficult as possible just to screw a competitor.

My question still stands, Don’t dance around it. You are biased against Utopia because their a government created entity. Just as i am biased for them because they are not Qwest and are trying to provide services to their city’s that no incumbent would.

Again If UTOPIA were a private corporation starting up and the offering services in this market would you still be so apathetic towards the regulation being used in this way?

As to the economic viability of Utopia without all the subs. Between their ability to provide triple play, and premium data tiers at higher rates in that market they are doing just fine. Also fiber is cheaper to maintain then copper once it is in the ground.

I am glad that Tremonton finely has a choice in who to use for service, with Utopia they went from 1 company offering local phone/dsl service to 5-6 company’s offering higher quality digital voice and sync fiber that blows DSL away.

I wouldn’t say I’m “biased” because UTOPIA is government created. To be sure it is troublesome that a city government can come in and compete with a private business by leveraging tax receipts. But I don’t think that’s the real point. At some point in time UTOPIA is going to have to stand on its own and quite frankly I don’t see it. Even if UTOPIA has 20% of the city now – and I doubt that is the case… but let’s say that they are able to secure a total of 40% of the total market in 2009 that still doesn’t get them to financial stability.

luminous asked:

Again If UTOPIA were a private corporation starting up and the offering services in this market would you still be so apathetic towards the regulation being used in this way?

I would answer that I am NOT apathetic towards the regulation being used in this way. Because the regulation is designed for this very application! That’s what you’re not getting. Local Exchanges with less than 5,000 access lines are protected for a reason. Tremonton is NOT Centerville or Salt Lake City. It’s a small rural town with customers served far beyond its city limits. That is the spirit of this rule and quite frankly the planners and managers of UTOPIA should have taken care of this before they laid fiber in Tremonton. It was a known fact but they chose to ignore it and now they’ve invested all this money a great hue and cry is erupting from UTOPIA, Service Providers and supporters alike but there’s no escaping it. The rule is there. It’s been there in the public domain for 10 years and UTOPIA wants to ignore that they have this problem trying to deflect it’s lack of proper planning at the feet of Frontier who by all accounts has played fair with UTOPIA. Is it Frontier’s problem that 10 years ago the Utah PSC enacted this rule to protect small rural telephone carriers? I submit to you that if UTOPIA tries to get an exception to this rule you will see the 10 members of the Utah Rural Telephone Association http://www.urta.org/ go nuts and pull out all the stops to quash the effort. Because if you start with Tremonton, who’s next – Price or Roosevelt or Manti. The phone lobby is too powerful in Utah to let this happen.

Frontier has to provide service to those customers that live 10 miles out of town and unless things have changed in the past few years Frontier doesn’t get to access RUS High Cost Supported Funds like the other rural telcos in Utah because their overall size nationally. They do get a small subsidy that helps with those customers that are not in densely populated areas but their overall income is derived from providing services and not subsidies.

I too am actually glad that Tremonton has competition. You might not think that from my responses – but I’m a free market believer. Competition is great! It makes everyone offer more to their customers and in the end it’s the customers that win.

But competition also brings winners and losers and I just don’t see UTOPIA being able to win. Even without the LNP issue their business model doesn’t add up. Adding the LNP issue in, they’re really in a hole. Who will buy dial tone from the providers if they can’t port numbers or have E911 ANI and ALI displayed at the PSAP.

My frustration with UTOPIA is government meddling in the affairs of private businesses, using unfair advantages such as tax revenues as collateral for a loan. Low interest loans from RUS for a while and then going back to the well to refinance, putting the tax payers in Tremonton on the hook for more money over a longer term. It’s troubling and should concern the taxpayers in Tremonton. That coupled with the business model for UTOPIA makes me opposed to their cause.

If you told me that Frontier or Qwest or any other private company was going to overbuild Tremonton with 60% buried fiber, coupled with transport costs back to Salt Lake City and ONLY take the service to the city limits and expect a reasonable return on their investment I would say they’re crazy and it will never work. Those two things make me doubt UTOPIA.

In other words yes you support them using any loophole, regulation, or law possible against private and government entity’s to protect their monopoly status rather then compete on level of available services, pricing, and support.

You show that you are clearly biased towards the continued status quo of a government subsidized and protected monopoly using unethical and often illegal tactics to keep out any form of competition no matter the source.

If city’s like Tremonton Don’t take the initiative for themselves they will NEVER have modern Telecommunications services, They will NEVER see data connections faster then basic DSL or in some rare cases Cable.

Competition brings choice as well, their may be winners and losers but alias that is the game of life.

Jason, You keep talking about UTOPIA needing to provide the LNP paperwork. But isn’t that really the service provider such as XMission, Mstar, etc… that would need to provide such paper work? Not UTOPIA themselves as they don’t actually provide the phone service?

you misunderstand Jonathan neither utopia nor any of the service providers can not receive such paperwork as their are less then 5000 lines in Tremonton. So by refusing to port numbers to anyone without the paperwork they are effectively holding their customers numbers hostage.

The LNP issue goes a lot further than UTOPIA. We’re really asking if an ILEC should be able to get anti-competitive regulation in its favor to the detriment of customers in its service area, especially since it already receives a significant amount of federal and state support to operate and maintain the wholesale side of the network.

I’m trying to sort thru lots of issues here with no really good answers.

I thank Jason for his insight and sharing his apparent knowledge of the regulatory issues.

I’m not clear on where I land on many of these issues. There are good arguments on both sides of some.

It’s hard to fault Frontier for accepting protection for their investment that is not only legal, but designed to protect them in exactly this situation.

On the other hand, it’s a shame the customers are hurt by the state allowing (supporting) anti competitive behavior.

I guess the question might be, is the harm to the few (customers that find it difficult to switch in Tremonton or elsewhere) outweighed by the good to the many (the customers protected from not having any service, by the small ILEC’s potentially going out of business after a company cherry-picks the higher density service areas they serve?)? Perhaps that is why this type of regulation exists.

I suspect the state never expected someone would overbuild and THEN find out about the regulations. It’s likely that they expected overbuilders to know the regulations before building and therefore making a business decision as to if they would build.

If UTOPIA did not know about this problem in advance it speaks to problems in their management. They should either have people on staff or on contract that know federal/state/local regulations inside and out.

I can’t help but think that if UTOPIA had hired someone with telephone/cable company “on the ground” operating experience they might have not made this mistake?

Of course, they might not have made any mistake and might have known about it going in. I don’t know.

According to UTOPIA, they were fully aware of the challenges going in.

So Jesse – Am I to think that UTOPIA was foolish investing millions of dollars in the Tremonton fiber project since they knew of the LNP issue in advance? That’s like saying to an airline. You can use our airport but you can only fill the plane two thirds full!

And what does that say about the City of Tremonton who should be using all of UTOPIA’s services. One third of their communications is going to still be with Frontier – a nice reminder that they didn’t think this through.

I can just see the city council meeting where they have to vote on using sales tax revenues to start paying off the loan. I image they would say something like: “… if it weren’t for the LNP issue setting us back we would have been profitable…” Of course all the people that got Tremonton into this fix will be long gone by then.

I have limited sympathy for Tremonton City in this respect. They knew that LNP was an issue but they chose to forge ahead and now they’ve invested millions of dollars in this project all to find out that they can’t use one of the main features that people want. Would you call that arrogance or a blatant act of hubris?

I also did some checking with a Frontier technician last week and the 20% figure cited in your post #8 is grossly misstated.

If UTOPIA has planned so poorly in Tremonton, how come they snapped up 20% of the market without LNP? </blockquote

From what I was able to glean, Frontier lost a few access lines last year (<3%) but actually gained high speed DSL customers and that trend is continuing into February with a promotion for 250 Channels of Dish Network for $9.99 per month and somehow they are giving away a netbook laptop with DSL purchase. Every customer that takes the laptop is locking into a two-year contract – thus thwarting any effort by UTOPIA to win his or her business. The technician that I spoke to stated that they have actually gotten some winbacks from UTOPIA because service issues too.

To be sure there going to be some UTOPIA converts and Frontier will suffer those losses, however I suspect someone at UTOPIA grossly inflated the 20% figure – again the UTOPIA business model doesn’t add up. Considering the take rate issue which we can debate here all day long since we aren’t on the inside of both companies then add the LNP issue and I just don’t see a long term viability for UTOPIA’s Tremonton territory.

I somewhat agree with Jason. Currently that would be 1/3 if they can’t port phone AND are not even offering video.

BUT….their headend should come on line soon (I’ve heard March 1st or so?)so that will likely address the video issue. Other than none of the providers have experience with video…but they will learn and I’m sure do fine.)

As far as not being able to port, the importance of the issue is somewhat related to the number of new moves in a community. In Provo it would not be as much of an issue as some communities. Provo has a large student population and a significant number of moves. Whenever someone moves in/out the port may not be an issue for that customer.

There are also a number of people that would be willing to change their number to get high speed internet or a triple play at a great price.

I think it interesting to look back at the ORIGINAL UTOPIA subscriber projections as to what the take rate would be in Tremonton. This may give some idea if UTOPIA expected lower penetration due to the inability to port existing phone number.

The residential take rate for Tremonton was the highest on the list of cities. Shown as a maximum take rate of 92%, a minimum of 62% and a likely take rate of 72%. For businesses it was a max. of 97%, a min. of 50% and a likely of 74%. (Source: UTOPIA Feasibility Presentation May 5th 2003)

To me it appears unlikely the inability to port phone numbers was considered in these numbers. However, UTOPIA could have (and likely did?) lower these expectations later. I’m sure the “new” UTOPIA did NOT expect to see take rates anywhere near those used to sell the project to the cities in 2003.

Sadly, the “new” UTOPIA seems rather risk adverse to setting ANY public goals, so we can never know if they are doing ok and are on track or are completely failing.

Very good for THEM (UTOPIA management) but very bad for the PUBLIC and the cities in my opinion.

I fully understand why UTOPIA does this, I cannot understand why the city leaders allow this. Judgment Day is coming. But one day the bonds will have to be paid and the chickens will come home to roost and all will be revealed….tick…tick…tick.

Jason: You’re missing an important part of the picture. The pre-sales research showed that a significant number of Tremonton residents were wireless-only not because they preferred cell phones but because they disliked Frontier so much. And those customers were able to do a wireline-to-wireless port per Utah PSC rules (provided I read the orders correctly). I would bet UTOPIA picked up a fair number of those customers. Also note that they closed sales with 50% of the homes and businesses they visited in the city. You’re turning LNP into a bigger stumbling block than it is.

Capt: UTOPIA’s research showed that the vast majority of Tremonton residents wouldn’t have subscribed to video even if it were available. Based on that, they decided to start marketing in the city before the video product was available and I do not think it is hurting them very much. I think that’s a wise move on their part.

Part of UTOPIA’s hesitance is to be able to point to things they have done, not things they are doing to do. I can understand that point even if I disagree with it. I doubt, however, that city councils are just being left in the dark. City council minutes in multiple member cities show monthly visits by a UTOPIA rep to give them updates, usually from Todd Marriott himself. Just look at how active they have been in Centerville.

The residential take rate for Tremonton was the highest on the list of cities. Shown as a maximum take rate of 92%, a minimum of 62% and a likely take rate of 72%. For businesses it was a max. of 97%, a min. of 50% and a likely of 74%. (Source: UTOPIA Feasibility Presentation May 5th 2003)

These chickens are definitely coming home to roost and these numbers prove it. The LNP issue was knows per Jesse’s previous posting however the so-called leaders of UTOPIA were allowed to project a 72% average take rate?

Industry standards are about 20% to 22% take rate – and I site what Surewest did to AT&T in Sacramento and what Time Warner did to them in San Antonio TX. If behemoths like AT&T are losing only 22% why would UTOPIA project 72% in a town like Tremonton? Heck fire Frontier has been offering DSL service in Tremonton for 5+ years and they have tons of customers on contract.

I find it hard to believe that the city leaders would allow such pie-in-the-sky manipulation of figures as that.

I heard that most of the businesses are contracted as well for Frontier’s Ethernet product and their PRI and T1’s are also contracted too. That kind of throws a monkey wrench into those take rate figures.

Here’s the rub – Tremonton City committed their sales tax revenue to pay for these bonds if the network does not succeed. I just found out that not only do they have to repay for Tremonton’s potential failure but they are also on the hook for the entire network so if Centerville goes down in flames they have to pay an equal share of that failure too! What in the world were theses “leaders” thinking?

Instead of ticking sound – I think I hear CLUCKING as the chickens run from the coop as evidence of the “retirements” that have already happened with original UTOPIA innovators and now Tremonton City Manager who just recently retired. I guess the accountability will be with the tax payers but not with the people that got them into the mess – if there is a mess at the end.

Jesse – since Frontier being a private sector company doesn’t have to share its internal numbers with anyone – other than their annual reporting to the FCC and Utah PSC I don’t see how UTOPIA could know how many customers were wireless only. Frontier’s exhange boundry is way bigger than Tremonton City limits. I don’t see how they could guage the local citizen’s likes or dislike for Frontier. I submit to you that UTOPIA has a tough row to hoe. But I will conceed and trumpet this – the citizens of Tremonton are the winners in all this. They have UTOPIA, COMCAST and FRONTIER to choose from. Even if they have to pay millions to the bank when and if UTOPIA fails they will have a great network and multiple options to choose from!

Each of the city’s had a market study performed before they voted on Utopia. I would guess that information was collected then. Probably with market survey’s and information that the city had in their possession. Utopia originally projected that a penetration rate of around 30-35% would be enough to break even anything above that could be used to fund further roll out into non pledging member city’s, pay back the bonds sooner, or lower wholesale rates.

I believe the survey were done by a 3rd party. The one I sited was done by SRI Research I think. It’s hard to hold UTOPIA or Dynamic City too responsible for a survey done by an independent 3rd party.

I am sure UTOPIA did not actually expect to get take rates in the 60-70%.

As far as info sharing, I’m looking for UTOPIA to share info BEFORE it becomes good or bad news. If they set a goal, it will tell us much about their understanding of the issues. If they reach or fail to reach those goals it will change our perception of their ability to set and meet goals.

A management team that sets realistic goals and meets those goals would give me confidence. A management team unable to set realistic goals or meet those goals would cause me concern.

Personally, I question the ability of the city overseers to ask the right questions and drill down on the answers to be comfortable there is sufficient oversight. It’s VERY clear that in the past there has NOT been sufficient oversight by the cities.

If the cities actually know much more and are just keeping the public in the dark….that should be unacceptable to all.

It’s a simple question to me…do the people whom have their money at risk, the taxpayers from UTOPIA cities…have a right to know how the project is going?

Can anyone answer that question with a “NO!”? OK, anyone other than UTOPIA and the politicians that are currently keeping their citizens in the dark? What are they hiding?

Saying things like we closed 50% of the sales presentations we made tells us nothing. You are pre-selecting the sample. You are only counting those people that were inclined to want to hear the presentation, meaning they had an interest in the product. That type of number gives no indication of the overall sales number or overall interest.

I knock on 10 doors, 8 send me away without allowing me to present. They just say “I’m not interested!”. Of the 2 I present to, 1 takes the product. That’s 50% close to presentation, but the actual sell in rate is only 10%.

I don’t know much about Utopoa, but I will attest to the fact that Frontier is a “bad player”.
They have a monopoly in rural areas, and thus takes advantage of that fact. I know because unfortunately I am one of their dis-satisfied customers. In the last 6 years I have yet to get a bill from them that reflected the correct amount promised. They promise one price and NEVER charge that price (surprisingly, it is ALWAYS more than the prices quoted)

To get the bill corrected requires a phone call that lasts between 1 and 2 hours. The whole time the service rep is looking for more services to offer / upsell you.

Their ploy is to keep YOU calling them month after month. If you don’t your bill will creep $10 – $20 a month, until you get sooooo pissed off about the bill you DO call.
And if you don’t call, just more money for them.

I am just looking for an escape route away from Frontier, and keep my number that I have been maintaining for the last six years.
it will be very inconvenient to lose that number.
but now they seem to be hiding behind LNP locked numbers.

I would like to say I am some sort of minority, but many people in our town say they experience the same thing. And would happily flee Frontier if they had another option.

Now enter Verizon “home phone” I have tried the service here and it works wonderfully. except Frontier is now holding the number and hiding behind their LNP waiver.

Considering how Frontier is treating customers in our area, I would not put the same behavior passed them in ALL of the areas they service. Given the opportunity !